NEWSMAKER-Ergen puts chips on Sprint in latest wireless bet

April 15, 2013|Reuters

By Liana B. Baker

April 15 (Reuters) - Charlie Ergen, who has never shied awayfrom risky bets and legal battles as the chairman of DishNetwork now finds himself in the biggest gamble of hiscareer with a $25.5 billion offer for Sprint Nextel Corp.

The offer, which trumps one made by Japan's SoftBank Corp, would cap off years of Ergen's investing in wirelessspectrum assets in a bid to diversify his pay-TV company beyondsatellite television.

Until Monday, the former full-time poker and blackjackplayer - who made his fortune selling satellite dishes door todoor - had invested about $3 billion on wireless assets. InJanuary, Dish made a $2.3 billion bid for Clearwire, aU.S. wireless company.

But the move on Sprint sets the stage for a potentialbidding war with another self-made billionaire, Masayoshi Son,the founder of SoftBank, a Japanese telecommunications andInternet company.

Ergen brushed off questions on Monday about whether Dishwould prevail in a bidding war with SoftBank.

"It's very vintage Ergen," said Steve Soranno, an equityanalyst at Calvert Investment Management, which has $13 billionunder management. "If you view it as a move on a chess board, itstrategically makes sense.

"If SoftBank counters or raises its bid, then Ergen weakensa potential competitor. If Softbank, on the other hand drops,Ergen gets" what he wants - spectrum and customers, Sorannosaid.

What stands between Ergen, 60, and completing his strategyis a Masayoshi Son, 55, the executive who tried to buy Sprintfor $20 billion in October.

"I think we have a lot of in common. We are two individualswho saw the value in Sprint and Clearwire. His vision is 300years old and mine is three years long," Ergen said in aninterview.

While a fight could still be on the horizon, some analystsbelieve a possible tie up between Softbank and Dish is in theworks. Son has said he sees Japan's market as stagnating and hasbeen focused on opportunities to expand abroad, which was partof the rationale behind Softbank's initial bid for Sprint.

"It is also possible that Masa-san and Ergen could come tosome type of network and content joint venture in which Dishwould own a minority stake in Sprint with SoftBank as thecontrolling shareholder," Macquarie analysts Amy Yong and KevinSmithen said in a research note.

Ergen also hinted at a potential collaboration with SoftBankand downplayed any notion of a fight looming with Son.

"(Son's) got a vision and we've got a vision and much ofthat is very similar," Ergen said.

SoftBank did not respond to a request for comment, whileDish did not comment on partnering with SoftBank.

KNOWS HIS WAY AROUND THE RING

Ergen is known for his sparring skills in the board room andthe courtroom.

He provoked a lawsuit by all the major U.S. broadcasterslast year for introducing a digital video recorder that letsDish subscribers automatically skip commercials and threatensthe broadcasters' revenue. That case is ongoing.

Like any good gambler, he knows when to fold. He paid $700million to Cablevision after a failed joint venturecalled Voom; and $500 million to TiVo in the midst of atrial.

Analysts say Ergen loves getting the upper hand over others,which may be why he finds himself in so many corporate battles.

"He makes a bold move and he says, 'hurdles be damned,' andhe'll execute his vision and swipe all the hurdles aside,"Soranno said.